Family Dollar’s Board of Directors was notified last week via letter that Dollar General was attempting to purchase the company. This has stirred the pot because Family Dollar had already signed an agreement to be acquired by Dollar Tree. Dollar Tree offered $74.50 per share in a cash/stock combination. Dollar General topped this with an all cash offer valuing Family Dollar at $78.50 per share, or $9.7 billion.
Sales have been dwindling for Family Dollar, and they’ve been forced to close a number of locations. When informed of the agreement between Dollar Tree and Family Dollar, certain deductions were made by Dollar General indicating the time may be right to submit a bid. The agreement primarily told Dollar General that Family Dollar is willing to entertain offers.
Dollar General may be concerned about a more efficiently managed Family Dollar, which could pose a larger threat in terms of competitiveness. If accepted, assuming no anti-trust issues, the deal would cement Dollar General’s position as the largest small box discount retailer in the nation.